Economy

Economic Diversification: FG’s Tract in Developing The Railway


President Muhammadu Buhari on Thursday, June 10 2021 launched the Lagos-Ibadan railway project’s commercial operations at the Mobolaji Johnson Railway Station in Ebute Metta, Lagos, The President hailed the achievement as “another landmark in this administration’s drive to revitalize the railway system and establish it as a preferred mode of transportation for both passengers and freight.”


The President also stated that his administration would continue to place a high priority on the railway system as a transportation backbone that can revolutionize the country’s industrial and economic activity.


This positive development is a remarkable milestone because the railway system is one of the most essential and cost-effective forms of transportation over long and short distances. It has established itself as one of the safest modes of transportation as well as an enabler of economic progress.


Over the last 30 years, the vital need to develop Nigeria’s rail infrastructure has been a burning problem. The extensive topography of Nigeria, as well as the structure of its economy, requires an effective and reliable rail infrastructure. Regrettably, the Nigerian Railway Corporation has been largely defunct and inefficient since the decline and deterioration of the railway system built during the colonial era.


Railway construction was discovered to be the practical solution to the difficulty of connecting the Nigerian coast to its hinterland as early as 1893. The railway was supposed to harness the protectorate’s economic resources and aid general development as a reliable mode of communication and transportation. Since the inception of the Nigerian Railway Corporation in 1898 and the gaining of legal right to construct and operate rail service in Nigeria through the passing of the Nigerian Railway Corporation Act of 1955, the company has faced many challenges including inept management, a complete lack of maintenance of rail and locomotive assets and even bankruptcy.


In recent times, there has been a re-commitment by the federal government in facilitating the development of the railway system. Sequel to this, previous administrations had invested billions although very limited results were seen. Most rail projects suffered several setbacks ranging from embezzlement to theft of materials meant for the construction of railway tracks. The federal government is presently increasing investments in infrastructure development through its National Integrated Infrastructure Master Plan (NIIMP). This will enable Africa’s largest economy to transition away from its dependence on oil. Experts believe railway transportation is particularly required for this. Nigeria can boast of having one of Africa’s largest national rail networks, although a large portion has fallen into disrepair.

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While the NIIMP forecasts that Nigeria will need to invest $2.9 trillion over the next 30 years to construct the requisite infrastructure, several billion-dollar transportation projects are already in the works to help the economy grow in the short and long term. In February 2021, the government announced InfraCo, a new public-private partnership fund with an initial capital of N1 trillion ($2.6 billion) from the Africa Finance Corporation, the Central Bank of Nigeria, and Nigeria Sovereign Investment Authority to increase funding for road and rail projects.


The administration of Buhari prioritized railway infrastructure development and to this effect, various benchmarks have been achieved. With the building and operation of the Abuja Light Rail, the Abuja – Kaduna Rail, and the Lagos – Ibadan Rail, the narrative has just begun to shift. The Abuja- Kaduna train line construction especially was one of Nigeria’s first standard gauge railway modernization projects that was commissioned by Nigerian President Muhammadu Buhari in July 2016. The train line links Abuja, the federal capital with Kaduna. This enhanced the faster movement of goods and people between the two states. Also, following an inauguration ceremony in Agbor, Delta state, the 1, 435 mm gauge north-south railway linking Itakpe, Ajaokuta, and Warri was formally opened for commercial service. Other rail projects in the pipeline include the standard-gauge lines between Ibadan and Kano, Port Harcourt and Maiduguri, and Port Harcourt and Calabar, the $2 billion train project that will connect the country to Maradi, Niger’s northern neighbour, and the $3 billion Port-Harcourt-Maiduguri railway which will link Nigeria’s oil-rich southern city with one of insurgency’s worst-affected districts.


Finance, on the other hand, remains a major impediment to the development of Nigeria’s rail infrastructure. An analysis of all of the railway projects reveals that there has been a heavily reliant on external loans. For instance, The Abuja – Kaduna was budgeted at $876million with 500 million in loans from the Exim Bank of China in which the balance was funded by the Federal Government of Nigeria (FGN). Also, the Lagos – Ibadan budgeted at $2.53 billion was Loaned from the Export-Import (Exim) Bank of China. This implies that the Nigerian government is spending billions to repair and build new railway infrastructure for the country’s overall infrastructural development. Engr. Alhassan Musa Ibrahim, chairman of the Nigeria Railway Corporation (NRC) Board, also stated that apart from financial obstacles, the project also faced numerous hurdles. With the federal government’s perseverance, the projects however are poised to reach the completion stage.

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The economic advantages of this new railway development cannot be overstated. It is important to note that the transport sector plays a critical role in economic upturn; this is so because the easier the movement of goods and services the cheaper for the consumers. More so, it is no news that a city such as Lagos with high social mobility and bedeviled with heavy gridlocks will benefit immensely from this railway project. When this is achieved, most trucks transporting goods across the state and the country at large will cease to operate with the emergence of a more effective and efficient transport system.


The intra- and inter-project is one step towards providing more transportation options for people and eliminating significant logistics constraints that have resulted in higher expenses and lower productivity. Due to the deterioration of the railway system, 90% of Nigerians had to rely on the road for internal trade. As a result of the fragmented nature and limited capacity of the trucking business, this generates congestion and is also more expensive. Without a doubt, the rail will help to extend the life cycle of our roadways while also reducing port congestion created by long lines of vehicles waiting to transport cargo from the ports. The reduction in the number of trucks and tankers that produce long hours of unpleasant traffic snarls in the metropolis will be perhaps more crucial to Lagosians.


Speaking on the Lagos-Ibadan railway project, Fidet Okhiria, managing director of the Nigerian Railway Corporation, states that it will “provide a huge boost to the economy in the sense that it is linked to the port.” He stated that as a result of the traffic issues, the value of commercial activities in Apapa has essentially decreased therefore this development will certainly increase business activities in the area.


Also commenting on the benefits of the Lagos-Ibadan corridor as well as other ongoing railway projects across the country, President Buhari said The Lagos – Ibadan railway project will enable the transporting of goods to the hinterland by rail directly from the Apapa port to Ibadan dry port, from where they can be distributed to other parts of the country.

In general, the initiative will strengthen Nigeria’s transportation systems to enhance the railway network plan. It would improve interstate connectivity in the states of Lagos, Ogun, and Oyo, as well as speed up the industrialization and urbanization of regions along the line and, creates economic growth. The functioning of this rail system will ease mass passenger movement, alleviate road congestion, minimize the number of road accidents, and improve traveler safety.


Given the previous lack of maintenance culture of the railways’ systems, several concerns have been raised about the trains’ and services’ long-term upkeep. In response, the FG has assured that preparations are in the works to keep the Chinese firm that built the trains and stations on board until Nigerians have gained the experience and ability to handle the situation. However, just because the train is being launched today does not mean that concerns about the project’s cost, freighting, ticket racketeering, damage of rail equipment, insecurity, capacity to handle more passengers, promptness of service, and cost of a ride are no longer valid. Although it is unclear how all of these concerns will be addressed, it has been revealed that plans are in the works to develop train trip Apps that will aid in the detection of fraudsters.

Categories: Economy, Features